Rupert Murdoch's flagship tabloid, the Sun, established a "network of corrupted officials" and created a "culture of illegal payments", the police officer leading the investigation into bribery and hacking at News International has alleged.

On a day of dramatic developments surrounding the investigations into the tycoon's newspapers, Sue Akers, the deputy assistant commissioner of the Metropolitan police, told the Leveson inquiry into press standards there had been "multiple payments" by the Sun to public officials of thousands of pounds, and one individual received £80,000 in alleged corrupt payments over a number of years. One Sun journalist drew more than £150,000 over the years to pay sources.

Akers's intervention – a day after the Sun launched a Sunday edition – was designed to rebut criticism of her investigation by Sun veterans, unhappy that 10 reporters and executives from the tabloid had been arrested since last November.

She said Sun reporters largely published "salacious gossip" on the back of the information received. The cases her team were investigating were not ones involving the "odd drink or meal" with public officials, but regular payments using an internal system designed to hide the identity of those allegedly receiving money illegally.

In other developments:

• The Leveson inquiry was also told of an internal News International email that showed how much Andy Coulson and Rebekah Brooks were told about News of the World phone hacking in 2006, which contrasted with public statements of ignorance made by both former editors of the Sunday tabloid subsequently.

• Charlotte Church, the singer, agreed a £600,000 settlement from News International for phone hacking, including £300,000 in costs.

• It emerged that more than 200 further alleged victims of phone hacking, ranging from former boxer Chris Eubank to the Ukip leader, Nigel Farage, are making claims against News International.

• Lord Justice Leveson took aim at Michael Gove, the education secretary and former Times journalist, who had said that the inquiry, launched by David Cameron last summer, was having a "chilling effect" on Fleet Street. The judge said that he believed in freedom of speech and freedom of the press, but added that journalism must obey the rule of law and act in the public interest.

Murdoch himself is understood to have studied Akers's incendiary testimony, and issued a short statement a couple of hours afterwards. He said: "As I've made very clear, we have vowed to do everything we can to get to the bottom of prior wrongdoings in order to set us on the right path for the future. That process is well underway. The practices Sue Akers described at the Leveson inquiry are ones of the past, and no longer exist at the Sun. We have already emerged a stronger company." News International insiders also said the Sun had tightened up its system for cash payments last summer, with any such payments now having to be signed off by the title's editor, Dominic Mohan.

Murdoch was otherwise in a buoyant mood, tweeting about the Sun on Sunday's debut sales. "Amazing! The Sun confirmed sale of 3,260,000 copies yesterday," he wrote, as buyers ignored the corruption allegations to pick up the newspaper that immediately became the market leader on Sunday. Sales of rival red top titles slumped by between 15% and 30%, with the nearest challenger, the Sunday Mirror, down to 1.3m from a January average of 1.75m.

Akers was the first witness in the second part of the Leveson inquiry, which aims to examine the relationship between the press and the police. Earlier in the morning, Robert Jay QC, counsel to the inquiry, read out an email dated September 2006 – five weeks after the Sunday tabloid's royal editor Clive Goodman and a private investigator, Glenn Mulcaire, had been arrested on hacking charges – which detailed how much Brooks and Coulson were told about phone hacking. Brooks was then editor of the Sun and she had been editor of the News of the World. Coulson was editor of the News of the World at that time and was later David Cameron's director of communications in No 10.

The note was written by Tom Crone, the former chief lawyer at the Sun and the News of the World, and was sent to Coulson, based on information received from the police by Brooks. Crone warned Coulson that the police had Goodman and Mulcaire "bang to rights" on illegally intercepting voicemails of Buckingham Palace staff – and that the police had discovered a list of "100-110 victims" on the basis of evidence seized from Mulcaire's home.

Coulson was also told police had found records of payments to Mulcaire from News International worth over £1m.

Goodman and Mulcaire pleaded guilty in November 2006 and were jailed in January 2007, at which time Coulson resigned his editorship, four months after the Crone email. At that time Coulson said that while he knew nothing of hacking he took "ultimate responsibility" for what had happened. He used a similar formula in 2009 when he was working for the Conservatives, telling a parliamentary committee: "I have never condoned the use of phone hacking and nor do I have any recollection of incidences where phone hacking took place ... I took full responsibility at the time for what happened but without my knowledge and resigned."

Brooks also repeatedly denied that she, or anybody within News International, knew about the extent of phone hacking at the News of the World in the years after the Goodman and Mulcaire convictions.

Responding to the first reports by the Guardian in July 2009 that hacking was more widespread than the activities of a single "rogue reporter", she wrote to the Commons culture committee to say: "The Guardian coverage has, we believe, substantially and likely deliberately misled the British public."